Northern Trust Posts Flat Third-Quarter Income

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Northern Trust Corporation, a financial services company headquartered in Chicago, this week reported its third quarter earnings. Income over the quarter was on-par with that seen in the third quarter of 2013 and up slightly from income during the second quarter of 2014.

Northern Trust took in $204.5 million during the third quarter of 2014, just shy of the $206.5 million in income seen during the third quarter of 2013. Earnings for both this year and last year amounted to $0.84 in net income per diluted common share. The past quarter's earnings were an improvement on the second quarter of 2014's income of $181.9 million. The company's return on average equity hit 10.1 percent during the third quarter, down from the 10.6 percent seen in 2013.

“Our financial performance in the third quarter of 2014 reflects continued growth in our business serving personal and institutional clients," said Frederick Waddell, chairman and CEO of Northern Trust. "Trust, investment, and other servicing fees, which represent two-thirds of our revenue, increased 11 percent compared to last year. New business and higher equity markets contributed to strong growth in assets under custody and under management, which increased 13 percent and 9 percent, respectively. Our pre-tax profit margin improved to 28.2 percent in the quarter and our return on equity was 10.1 percent. This performance reflects ongoing efforts focused on growing our client franchise while achieving sustainable improvements in productivity.”

Statistical rating organization Fitch Ratings commented on Northern Trust's third quarter earnings, calling the report "more of the same" and "relatively flat" compared to earnings seen one year ago. Fitch called Northern Trust's latest earnings report "satisfactory from a credit perspective," but also voiced concerns that earnings were below the company's long-term averages.

According to Fitch, growth for Northern Trust will continue to be "challenging." Expenses in particular could be a problem area for Northern Trust because of increased regulatory and compliance costs.